Treasurer Urges Student Loan Plan : Education: Kathleen Brown, speaking at CSUN, calls for immediate approval of her proposal to help middle-class families ‘caught in the squeeze.’

State Treasurer Kathleen Brown called on Gov. Pete Wilson and the state Legislature Tuesday to immediately approve an “alternative” loan program that would provide assistance to thousands of middle-class college students who might not be able to attend college next fall.

Brown held news conferences at the Capitol steps in Sacramento and then at Cal State Northridge and UC Berkeley to call attention to her proposed California Alternative Loan program. If approved by early August--at the latest--the program would provide up to $80 million in student loans by next fall, with much of the money going to middle-income families struggling to keep up with skyrocketing college costs and declining federal aid, Brown said.

“This quite extraordinary program will provide access for students who have the will but not the wallet, for middle-class families that have been left out of other programs . . . and caught in the squeeze,” Brown said at a noontime news conference at Cal State Northridge. She was joined by student leaders, higher-education officials and state Sen. Patrick Johnston (D-Stockton), who sponsored the legislation to get the program under way.

“Given the dismal condition of the state budget,” Johnston said, “this is one of the few ways to increase access to higher education that we have.”

The program is designed to help about 20,000 qualified students a year supplement their financial aid with fixed-rate loans of as much as $25,000. The program would be funded through the sale of tax-exempt bonds, and loans would be based on the income, assets and credit histories of students’ parents.

The loans would be given at about 8.5%--lower than other private loan programs and with far more money made available than through other publicly subsidized programs, Brown said. The money could go toward fees and tuition, room and board and other expenses.

Legislation enabling the state to finance the program passed the state Senate unanimously in May but needs approval by the Assembly and Wilson, who has yet to comment publicly on the program, Brown said.

State Finance Department officials have opposed the program on technical grounds, but Brown said she was confident of approval--especially since the loan program would cost the state nothing.

The program is supported by a host of higher-education officials, both public and private, many of whom said they were running out of money to subsidize college educations.

“We in the 20-campus state university system consider this an important priority,” said Donald Bianchi, acting vice president for academic affairs at Cal State Northridge. He said there was a 30% increase in the demand for financial aid this year in the entire California State University system, and that the number of applications at his university is expected to double this year to 20,000 students.

One student attending the news conference said he will need such a loan next semester, and plans to apply if they become available.

“They’re cutting down on financial aid, so it’s a good idea,” Charles Kim, 24, said.

Brown said such a loan program is a necessary supplement to existing loan programs because tens of thousands of middle-class families are being squeezed out of the higher-education process. Their incomes are not rising as fast as tuition costs at public and private colleges, and federal aid is being slashed so much that a typical state college education now costs 66% more in constant dollars than it did five years ago, education officials said.